What goes around comes around…
Context:
- Prior to the decision discussed in this article, UK interim-license declarations had been sought by implementers (or net licensees in cross-licensing scenarios). Standard-essential patent (SEP) holders consistently argued that no such declaration should issue. Presently, the most acrimonious fight over interim licenses is unfolding in the dispute between research and licensing firm InterDigital and retail and streaming giant Amazon (February 5, 2026 ip fray article on the latest development, Amazon’s second Unified Patent Court (UPC) appeal).
- We questioned the economic wisdom of TP-Link’s decision to bring a FRAND (fair, reasonable and non-discriminatory licensing) action in the UK (September 8, 2025 ip fray article). WiFi royalty rates are low compared to the size of cellular patent license deals.
What’s new:
- Today the High Court of Justice for England & Wales (EWHC) published a January 30, 2026 judgment by Mr Justice Richard Meade in TP-Link v. Huawei. Interestingly, it was not TP-Link who requested an interim-license declaration, but Huawei, showing that the UK interim-license regime can cut both ways. The back-royalties at issue go back to 2008, with interest calculated at U.S. Prime + 1% (compounded; and currently U.S. prime is 6.75%), whereas Huawei seeks lower royalties on older devices than for WiFi 6. Huawei asked the court to declare that its adjustable-license offer is FRAND (or, in the alternative, to state what is in fact FRAND).
- The court has now held that Huawei can reasonably request that TP-Link’s own offer, which amounts to $12M, be paid on a non-refundable basis. The next step is for the court to make a midpoint determination and set the amount that TP-Link has to pay in total as an interim payment, at which point interest comes into play. Ultimately, the final UK FRAND determination will apply, but Huawei would have the first $12M secured. Also, the non-refundable $12M part could be adjusted upward even on an interim basis depending on the exact number of white-label products for which TP-Link owes royalties. The court will now determine a midpoint, and whatever TP-Link pays above $12M will be refundable should the final FRAND determination be lower.
Direct impact:
- If TP-Link refuses, it knows that it will be deemed an unwilling licensee in the UK and, presumably, even more so in jurisdictions in which Huawei might seek injunctive relief (China, UPC, Germany).
- TP-Link will therefore presumably agree to take an interim license on the terms explained above. On that basis, Huawei will withdraw any infringement actions. As the decision notes, an agreement on an adjustable license also eliminates the risk of antisuit and anti-antisuit injunctions.
Wider ramifications: It is almost historic that a SEP holder has used the logic of UK interim-license declarations for its purposes. We will probably see this in only a minority of SEP disputes, such as when the emphasis is on back-royalties rather than prospective license fees, but there is a wide variety of fact patterns in SEP litigation. Huawei won’t have been the last net licensor to seek such a declaration. It is very significant that Mr Justice Meade accepted Huawei’s argument that only physical payments (not just security) matter.
Huawei itself apparently did not emphasize the term “interim license”. It used the term “adjustable license” like in its (meanwhile settled) dispute with MediaTek. But Mr Justice Meade says in the very first paragraph of his decision that he will refer to Huawei’s motion as “the Interim License Application”.
Router maker TP-Link, after almost 20 years of unlicensed use, apparently hoped that it could mitigate the financial damage by asking the English courts for help. But it was Huawei who then brought a motion in the UK in an effort to push for interim payments.
TP-Link appears financially solid, so whatever collateral it would provide would most likely never matter in practice. The value of any security would, therefore, be rather hypothetical. But what Huawei will get (unless TP-Link desires to be enjoined left, right and center) is a definitive $12M payment, and something more on top that will be refundable. Huawei can still fight for 4 or 5 times that amount in the interim-license context. Even the non-refundable part could be adjusted along the way (i.e., ahead of the full trial) based on some disclosures to be made by TP-Link.
The following holding is arguably the most important one in the entire judgment:
44. For these various reasons, as well as in relation to interest, I also made clear at the hearing and maintain that I would reject any argument that the interim payment should be paid into escrow and not given to Huawei. There is genuine value to Huawei in actually having the money.
It is interesting to see that TP-Link opposed Huawei’s motion, arguing that Huawei should first withdraw its enforcement actions. But Mr Justice Meade did not fault Huawei for wanting to conclude the interim license agreement first, followed by immediate withdrawals. For the most part, however, TP-Link apparently realized that it couldn’t avoid this, so the focus was on the amount.
Huawei showed that sometimes it’s better to identify and embrace an opportunity, even if implementers in many other cases just seek to delay the resolution of disputes. It just depends on the fact pattern and related economics in each case. Here, Huawei appears to have no appetite for protracted infringement litigation. What remains to be seen is whether it is in either party’s interest to conduct a costly UK FRAND trial when the gap between them could probably be bridged through good-faith negotiations.
What makes this potentially very costly for TP-Link is the amount of interest (U.S. prime + 1%, and then compounded) over such a long period of time. But that’s the risk unlicensed implementers can face, particularly after InterDigital v. Lenovo. TP-Link’s sales from 2008 until the second quarter of 2027 will have to be taken into consideration, with a $0.50/unit rack rate for WiFi 6 and substantially less for older versions.
Mr Justice Meade rejected TP-Link’s argument that interest should only come into play after the trial. UK case law is clear that interest is owed on back-royalties, and the decision applies this principle to interim payments, too (even if not to the non-refundable part, which is based on TP-Link’s position).
The exact midpoint figure should still become known in the near term, but after a further hearing called Form of Order Hearing. The result could be many tens of millions on top of the current baseline.
At the beginning of para. 51, Mr Justice Meade says the following about the midpoint:
I asked the parties to calculate the resulting amount on the basis indicated above: A mid-point between the number implied by the $12 million offer and the rack rate approach [$0.50 per unit for WiFi 6, substantially lesss for earlier versions], adjusting so that it goes back to the start of sales in 2008 and forwards to April 2027, with interest on the basis contended for by Huawei.
Counsel
Counsel for TP-Link: Andrew Lykiardopoulous KC and Thomas Lunt (instructed by WilmerHale).
Counsel for Huawei: Mark Chacksfield KC and Edward Cronan (instructed by Bird&Bird).